Transferring decision-making process from central to local government and enhancing the role of local communities in managing coastal zones is an increasing commitment by governments in Southeast Asia. This article analyzes decentralized coastal zone management in two neighboring countries, Malaysia and Indonesia. The Federal system in Malaysia is argued to be able to influence more decentralized coastal zone management and to promote community-based management approaches. Meanwhile, the large diversity of coastal resources and communities combined with a still as yet tested decentralization policy in Indonesia is argued to bring more challenges in implementing the decentralization and community-based approaches in coastal zones. The lessons learned in this study provide insight in how far decentralized coastal zone management has taken place in Malaysia and Indonesia. The significant differences in the pattern of coastal zone management in these two countries are discussed in detail. This study recognizes that co-management and community-based approaches can be appropriate in dealing with coastal zone management. This comparative perspective is important to the development of a bigger picture of sustainable coastal zone management processes and cross-regional knowledge-sharing in Southeast Asia.